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UKRAINE UPDATE: 12 MARCH 2024

Kyiv halts Moscow’s offensive – Zelensky; deadlock shifts war momentum in Russia’s favour – US spies

Kyiv halts Moscow’s offensive – Zelensky; deadlock shifts war momentum in Russia’s favour – US spies
Ukrainian President Volodymyr Zelensky. (Photo: Andrew Kravchenko / Bloomberg via Getty Images)

Ukrainian President Volodymyr Zelensky said his troops had blocked Moscow’s offensive and were stabilising the front line, even amid reports of Russian progress in the east.

The deadlock in Ukraine was “shifting the momentum” in the war in Moscow’s favour, US intelligence agencies told senators on Monday.

Zelensky said his country was racing to complete 2,000km of defensive fortifications as Kyiv ran low on ammunition and Russian forces went on the offensive.

Zelensky says Ukraine has halted Russia’s offensive

Ukrainian President Volodymyr Zelensky said his troops had blocked Moscow’s offensive and were stabilising the front line, even amid reports of Russian progress in the east.

“The advance of Russia has been stopped,” Zelensky said in an interview with the French broadcaster BFM TV on Monday.

The current situation on the front was much better than in the past three months, he said, commending the country’s military leadership and troops. This might change for the negative, however, if Ukraine didn’t begin to get sufficient military aid from the West, he said. 

In the third year of the invasion, Ukraine’s troops are struggling to overcome a shortage of ammunition and personnel, as well as a stalled $61-billion aid package from the US.  

Zelensky’s comments were unexpectedly confident in the light of recent reports. Ukraine suffered several local setbacks over the past months, stoking concern in Kyiv that the Kremlin could gain the upper hand by the summer unless allies stepped up military and financial aid.

Russian forces recently made confirmed advances near Bakhmut and Avdiivka in Ukraine’s east, the US-based Institute for the Study of War said in a Sunday report. Meanwhile, the current deadlock in fighting was “shifting the momentum” in Moscow’s favour, US intelligence agencies told the Senate on Monday.

Separately, Zelensky rejected the notion that French troops would be deployed in his country. “As long as Ukraine stands, the French army will stay within the territory of France,” Zelensky said in an excerpt of his interview with BFM TV released on X social media platform. 

Zelensky warned, however, that if Russia were to invade a Nato member, French soldiers could be engaged within the alliance’s territory. He described the scenario as “another issue” and a matter of a joint decision by Nato countries.

French President Emmanuel Macron previously irked some of his Nato allies when he said “nothing can be ruled out” when asked about the possibility of sending his troops to Ukraine. 

War momentum shifts towards Russia, US spies warn

The deadlock in Ukraine was “shifting the momentum” in the war there in Moscow’s favour, US intelligence agencies told senators on Monday.

Moscow had made continual, incremental battlefield gains since late 2023 and benefited from uncertainties about the future of military assistance from the US and allies, the top intelligence officials told members of the Senate Intelligence Committee in their annual presentation on the biggest “worldwide threats” facing the US. 

“This deadlock plays to Russia’s strategic military advantages and is increasingly shifting the momentum in Moscow’s favour,” they said. 

Central Intelligence Agency Director William Burns testified that “the Ukrainians are not running out of courage and tenacity. They’re running out of ammunition, and we’re running out of time to help them.”

Burns warned that without additional US military assistance, “Ukraine is likely to lose ground — and likely significant ground —  in 2024.” He said Russia was interested in the “theatre of negotiations” over ending the war and wasn’t ready to make significant compromises to do so.  

US intelligence officials frequently offer blunt and politically sensitive assessments at the worldwide threats hearings, and Monday was no exception both in the written report and in testimony led by officials including Avril Haines, director of the Office of National Intelligence, FBI Director Christopher Wray and Burns. 

Ukraine rushes to build 2,000km of fortifications

Zelensky said his country was racing to complete 2,000km of defensive fortifications as Kyiv ran low on ammunition and Russian forces went on the offensive.

The Ukrainian leader said he was counting on the “timely completion” of the three-tiered defence system, according to a comment on Telegram after he received a report from Prime Minister Denys Shmyhal on Monday.

“The task is massive, but the tempo so far is good,” Zelensky said.

The construction effort reflects the shift in momentum in the two-year war, with Russian forces making gains as Kyiv’s military struggles with dwindling ammunition stocks. Ukraine failed to make progress last year in a counteroffensive backed by Western-delivered weaponry.

The UK’s Defence Ministry said on Sunday that Kyiv was “almost certainly” bolstering its defences with anti-tank barriers known as dragons’ teeth, ditches, trenches and minefields.

“It is highly likely the expansion of defensive lines will reduce Russia’s ability to advance or exploit tactical gains as part of its ongoing offensive operations,” the ministry said in a defence intelligence update on the social platform X.

Ukraine’s ambition to seize back territory from Russia has given way to concerns in Kyiv that the Kremlin could gain significant momentum by the summer unless Nato allies and others step up supplies.

Zelensky’s top general, Oleksandr Syrskyi, said last month that Russia’s capture of the eastern city of Avdiivka was compounded by what he called mistakes by frontline commanders, which resulted in the retreat in the area. The fall of the city and several nearby villages fuelled fears that Kyiv’s defences might not be able to hold.

Russia weighs post-election tax hikes to fund war

Russia was weighing options for big tax increases to raise as much as four trillion roubles ($44-billion) as the war in Ukraine puts growing pressure on the government’s coffers.

Tax hikes on corporate profits and high-earning individuals were being considered, two people involved in the discussions said, asking not to be identified because the matter wasn’t public. The government may raise personal income tax to 20% from 15% now for those earning more than 5-million roubles, and company taxation to 25% from 20%, according to the “Important Stories” news site and confirmed by two people involved in the discussions.

Russia’s Finance Ministry didn’t immediately respond to a request for comment.

President Vladimir Putin has announced he intends to overhaul the tax system once he returns for a new six-year term in this week’s elections.

Individuals in Russia pay a 13% tax on annual incomes up to 5-million roubles, rising to 15% for anything over that level. Changes under consideration would lower the 15% threshold to 1-million roubles and increase the level to 20% on incomes above 5-million roubles, shifting many more Russians out of the lowest tax bracket. 

Russia names broker for frozen-assets swap with foreigners

Russia appointed a broker to conduct swaps of assets between Russian and foreign investors caught up in international sanctions imposed after the invasion of Ukraine.

Investitsionnaya Palata, a Voronezh-based brokerage that isn’t under sanctions, will gather bids from Russian investors wishing to exchange shares they hold abroad for cash that non-residents hold in so-called C accounts in Russia, according to statements from the Finance Ministry and the company.

Agreed-upon swaps are expected to be settled by 29 July, according to the statement by Investitsionnaya Palata. It affects only securities recorded in Russia’s National Settlement Depository and the maximum limit for any deal was set at 100,000 roubles ($1,100).

Russia blocked funds held by non-residents from countries it considered “unfriendly” in C accounts soon after the February 2022 war began. Those accounts contained more than 280-billion roubles as of the start of November 2022, the Interfax news service reported, citing the Bank of Russia.

The central bank hasn’t disclosed the amount of frozen assets since, though Interfax reported last June that the total had risen to nearly 600-billion roubles by the end of 2022, citing people it didn’t identify. Central bank Governor Elvira Nabiullina said in February that funds had gradually accumulated in C accounts, mainly through payments of dividends, coupons and the debt on bonds. 

The Bank of Russia set up a mechanism in December to enable Russian investors to sell frozen foreign securities to non-residents using money from their C accounts, following a decree from Putin.

Russian investment firm Finam estimates the value of the assets that may be swapped at 80-billion to 100-billion roubles.

“The number of investors who are waiting for the opportunity to exchange their blocked assets is measured in tens of thousands,” said Dmitry Lesnov, the head of customer service at Finam. The proposed exchange seemed possible to implement, but a lot would depend on demand from foreign investors and they might need to obtain permission from regulators, he said. DM

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